Rethinking mortgage protection: Is covering just the home enough?

With rising living costs, homeowners face unprecedented financial pressure. This gives advisers an opportunity to reframe the mortgage protection conversation, writes Andy Philo, Strategic Partnerships Director for Vitality.

Unsurprisingly, recent Protection Viewpoint research from the Association of Mortgage Intermediaries (AMI) found that the ongoing economic outlook is weighing heavily on homeowners¹.

For most people with a mortgage, their home is both their biggest asset and their biggest liability. In recent years, rising living costs and mortgage rate volatility have added to the pressure. According to the AMI report, over half of mortgage holders are feeling a big emotional impact from the current economic environment when making financial decisions¹.

Given the challenging backdrop, comprehensive mortgage protection is more essential than ever, but concerningly millions of mortgage holders still lack an adequate financial safety-net.

Homeowners are lacking comprehensive cover

Talk to most people about mortgage protection and it is probably life insurance that immediately springs to their mind. This is reflected in market data, that consistently shows sales of life cover outstripping all other forms of protection.

Research by the HomeOwners Alliance and LifeSearch found that while 50% of homeowners had life insurance, just 20% had critical illness cover and only 16% had income protection²

The low uptake of income protection is especially concerning. Vitality research shows parents with a mortgage could only keep paying for 4.5 months if they lost their income³, and 46% of homeowners would struggle to meet mortgage payments within six months following a sudden loss of income due to illness or injury². Shockingly, over a third of mortgage holders have no protection cover at all!²

Rethinking what we mean by mortgage protection

As an industry, it is time to double down on our efforts to ensure more homeowners are protected. But it’s essential that we don’t just stop at protecting the mortgage debt and nothing more.

The overemphasis on life cover at the expense of other forms of protection is leading to a situation in which all that’s really being protected is the bank’s debt liability in the event of the mortgage holder dying.

Yet, premature death is the least likely risk during the mortgage term. Vitality’s Life Risk Calculator shows a 30-year-old female with a 25-year mortgage has just a 2% risk of death but a 46% risk of being unable to work for one month or more.

The FCA’s Consumer Duty makes it clear: advisers must deliver good outcomes and avoid foreseeable harm. That means recommending solutions that meet client needs, offer fair value, and help them achieve their financial objectives. Limiting cover to the mortgage debt repayment alone risks falling short of that standard.

A good outcome isn’t just about paying off a loan - it’s about ensuring clients can stay in their home, maintain their lifestyle, and recover without financial stress. It’s about thinking beyond just the debt and considering the long-term picture.

^{[1] a-m-i.org.uk/wp-content/uploads/2025/11/Protection-ViewpointThe-Next-Chapter.pdf}

^{[2] Bricks But No Backup: 2.3 Million UK Mortgage Holders Have No Financial Safety Net - HomeOwners Alliance}

^{[3] Vitality urge parents to think beyond mortgage and safeguard stability | Money Marketing}